Mozambique Cuts 2016 Growth Forecast, Raises Inflation Outlook

Mozambique, Capital Markets in Africa: Mozambique revised its 2016 budget, cutting its growth forecasts as some donors suspended aid after the government admitted to hiding more than $1.4 billion in debt.

The country’s cut its gross domestic product growth forecast to 4.5 percent from 7 percent earlier, Finance Minister Adriano Maleiane said in the capital, Maputo, Thursday, following an extraordinary cabinet meeting to approve the State Budget Review.

State revenue is projected to decline to 165 billion meticals ($2.6 billion) from an earlier estimate of 175 billion meticals, the minister said. Expenditure is seen falling to 243 billion meticals from an initial forecast of 246 billion meticals. The inflation rate is expected to rise to 16.7 percent from 5.6 percent this year.

Mozambique’s government on June 30 said it had frozen spending aside from salaries and pensions until it has carried out a budget review, which it will present on July 10 when it will announce austerity measures.